Commonwealth Bank of Australia (ASX: CBA) has become the first of the big four banks to announce a temporary ban on home foreclosures for borrowers struggling in the COVID-19 recession.
Normally lenders, as a last step, will forcibly sell a home to recoup costs if a loan falls behind in payments. This usually happens in Australia after many iterations of payment negotiations and hardship arrangements.
However, Financial Counselling Australia (FCA) wrote an open letter to Australian banks in September calling for a moratorium on foreclosures for customers in trouble due to the pandemic.
CBA on Tuesday wrote back to FCA agreeing to a ban until September next year.
“Our customers are also worried about losing their home through no fault of their own,” said CBA retail bank group executive, Angus Sullivan, in the letter.
“I’m pleased to confirm that we will be putting in place a freeze on forced sales